A viable Republican substitute for the health care act used to be the yeti of Capitol Hill: often talked about, never seen. But it has suddenly become real. This week, three leading Republican members of Congress offered a realistic plan for reform, one that accepts the need to provide all Americans access to health insurance.
True, the proposal, from Sens. Orrin Hatch of Utah and Richard Burr of North Carolina and Rep. Fred Upton of Michigan, would repeal several essential features of the Affordable Care Act, including the requirement that individuals carry health insurance (and that most employers provide it) and the expansion of Medicaid. Other provisions would be scaled back; tax credits for buying insurance would go to those making up to 300 percent of the poverty line rather than 400 percent, for example.
But insurers would (mostly) still be prevented from denying coverage to those with preexisting health problems. Young adults could remain on their parents’ insurance until they’re 26. And the so-called Cadillac tax on gold-plated health plans would go away. Instead, the value of those plans above a certain threshold would be taxed as regular income.
Taxing the value of health insurance beyond $12,000 ($30,000 for a family plan), as the Burr/Hatch/Upton plan does, would work better because the federal income tax is progressive. Its effect would be bigger or smaller according to the taxpayer’s earnings.
The test for any Obamacare replacement remains its ability to provide comparable insurance to at least as many Americans, at the same (or lower) cost. And this proposal probably fails on the first two characteristics.
In the event the Supreme Court cripples Obamacare later this year by ruling against the law’s insurance subsidies, the new plan would be a good place to start in congressional negotiations over how to move forward. But first, these three members of Congress will have to get their Republican colleagues to embrace the idea.